Share this article

Share

The announcement of the cash for carbon capture and storage (CCS) technology came just hours after energy giant E.ON announced it was pulling out of the competition for the funding - leaving just one shortlisted candidate, ScottishPower.

The Department of Energy and Climate Change confirmed there would be a second round of CCS projects, with up to four more schemes given the go-ahead, although funding mechanisms had yet to be decided.

CCS works by capturing the carbon released from power stations' exhausts and piping it deep underground into empty gas and oil fields, such as those under the North Sea.

A more sophisticated version removes carbon from coal before it is burnt, turning it into hydrogen gas that can then be used to power turbines and generate electricity.

Many believe CCS is the only way to deal with Britain's looming energy crisis while meeting tough targets on greenhouse gas emissions.

But critics of the headlong rush to install carbon capture and storage warn that it is prohibitively expensive and that more space is needed underground to store it than people realise.

The technology has also never been tested on a large sale and will cost billions of pounds to implement.

Mr Osborne also said there will be extra money for a network of innovation centres for
hi-tech firms.

Setting out green measures in the comprehensive spending review, Mr Osborne said it was necessary when money was tight to 'ruthlessly prioritise' areas of the economy which would support economic growth, including low-carbon infrastructure.

He joked that yesterday protesters had scaled the Treasury urging ministers to go ahead with the Green Investment Bank - the first time anyone had protested in favour of a bank.

He confirmed the new bank would would go ahead, with £1 billion funding in the spending review - but he hoped much more would be raised by private sector investment and the future sale of government assets.

It is hoped the bank will fund clean energy and low carbon projects, leveraging billions of pounds in private finance.

Businesses and green groups have warned that some £4 billion to £6 billion is needed over the first four years of the green investment bank, from a combination of public and private sources, to ensure it has enough capital to do its job.

John Sauven, chief executive of Greenpeace, whose protesters climbed up the Treasury yesterday to protest over the bank, said: 'Billions of pounds for such a bank could provide thousands of new jobs and make Britain a world leader in cutting-edge low-carbon technologies.

'But the green bank has to be a bank. A poorly financed fund is not a green bank. It doesn't have the financial clout, or the independence to do the job, and will end up as nothing more than an ill-equipped quango.

'So if this government wants to live up to its own billing as the greenest ever, this bank must be independent and properly financed.

'Anything less will dash hopes of a new green economy for Britain, and our chances of tackling climate change and energy security'.

Despite fears over the future of green subsidy schemes in the spending review, the feed-in tariff which pays people for small scale green electricity generation is set to remain as it is until an already planned review in two years' time.

The proposed renewable heat incentive will also go ahead, although plans to pay for the scheme, which aims to boost green heating technology, through a levy on bills have been ditched as being 'overly complex'.

Instead some £860 million of funding aims to drive a ten-fold increase in renewable heat over the next decade.